Nissan reports drop in profit, taking stake in Mitsubishi

AP News
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Posted: May 12, 2016 7:29 AM
Nissan reports drop in profit, taking stake in Mitsubishi

TOKYO (AP) — Nissan, which is taking a 34 percent stake in scandal-ridden Japanese rival Mitsubishi Motors, suffered a 40 percent plunge in January-March profit as sales dipped and currency perks faded.

Nissan Motor Co. reported a 71 billion yen ($651 million) profit for the quarter Thursday. It had a 119 billion yen profit the same period of 2015.

Quarterly sales edged down 1.2 percent to 3.25 trillion yen ($29.8 billion).

A weak yen had worked as a plus for exporters like Yokohama-based Nissan, but the currency has been strengthening in recent months.

For the fiscal year, Nissan's profit rose 15 percent to 523.8 billion yen ($4.8 billion). The automaker forecast a 525 billion yen ($4.8 billion) profit for the fiscal year through March 2017.

Chief Executive Carlos Ghosn announced Thursday that Nissan will spend 237 billion yen ($2.2 billion) to become the top investor in Mitsubishi Motors by purchasing newly issues shares.

Nissan shares dropped 1.4 percent in Tokyo trading as Japanese media reported that a deal with Mitsubishi was imminent. Mitsubishi Motors issues, on the other hand, surged 16 percent.

Mitsubishi Motors has been rocked by a scandal over cheating on mileage tests to inflate fuel economy figures for its minicar models. It had another scandal, over a systematic cover-up of auto defects, which surfaced in the early 2000s, but the wrongdoing had dated back decades.

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